A makeover of an Argentine deal backed by corporate loans has triggered a two-notch upgrade on the national scale to BBB+' from BBB-' by Standard & Poor's.

Structuring agent HSBC "was looking to improve the payment capacity for investors," said Hernan Gutierrez, head of trust & fiduciary products at ABN Amro Argentina, the deal's trustee. Retooling the Ps35 million (US$9.5 million) senior tranche was two-pronged. HSBC raised the credit enhancement provided by a subordinated piece to 30% from a previous 20% and upped the weighting of the stronger credits in the pool, according to a source close to the transaction.

Effectively a small CLO, the transaction is backed by loans HSBC has extended to five companies, Shell CAPSA, Resinfor Metanol, Terminales Rio de la Plata, Zucamor, and Petroquimica Rio Tercero. None of them carries a public rating from S&P (see ASR 9/23, p.19).

Market players are closely watching this deal in the hopes that it will breathe life back into the domestic market. Until the crisis snowballed last year, Argentina was Latin America's most vibrant structured finance market. According to Fitch Ratings, the country now synonymous with financial disaster accounted for 45% of all domestic structured deals in the region from 1996 through 2001.

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